How Paying Tuition Can Affect Your Tax Filings

Whether you’re a student paying your way through school, a parent paying for your kid’s education, or a spouse paying for your partner’s grad school, the IRS will help you defray some of that cost.

There are also other ways that being or paying for a student, even if you’re just taking continuing education classes, will affect your taxes.

Read on to find out all you need to know:

Students Can Be Dependents

The first thing you should know is that students can still qualify as dependents of their parents. This has huge implications for your taxes, because it affects what tax credits, deductions and exemptions you can take. Normally, any qualifying child who is 19 or over is no longer a dependent. But if she or he is:

A full-time student

Under 24 years old

Providing less than half of his or her own support, and

Filing as single or married filing separately. . .

. . . then she qualifies as a dependent. For you parents out there, this means you can still claim an exemption for her. Students, it means that if you are filing taxes, you cannot claim any exemptions, and you also won’t be able to claim certain credits and deductions.

(But that’s nothing to complain about: It seems like a fair trade to have your parents paying for more than half of your expenses!)

Get These Deductions

Ah, lovely deductions. Those are the wonderful costs, like education expenses or IRA contributions, that the IRS subtracts from our income to reduce the amount it will actually tax us on. You might qualify for one or both of the following special deductions:

Do You Have a Student Loan?

You can deduct up to $2,500 for the interest you paid on your student loan last year. If you did, you should have received a form 1098-E from the entity to which you paid interest. Do you fit these qualifications?

You are not filing under the status married filing separately.

Your AGI is less than $75,000 if you’re single and $150,000 if you’re married.

You can’t be claimed as a dependent on your parents’ tax returns.

Are You a Student?

Do you fit all of these qualifications?

You're a student.

You are not filing under the status "married filing separately."

Your AGI is less than $80,000 if you're single and $160,000 if you're married.

You can't be claimed as a dependent on your parents' tax returns.

If all the above are true, then you should fill out a 8917 Form. If you still aren’t sure, read the form to find out the exact requirements.